Marina’s Dunes Project and the Magic of the Market

“It was a vast jumbled waste created by sub-human or pre-human monsters in a delirium of greed.” – Henry Miller’s first impression of American urban planning upon returning from his years in Paris

 

This generic big-box shopping center is the only part of the Dunes project to be built so far. The next phase calls for two hotels – one a high-end “boutique” hotel (100 rooms) and one of more average pretensions (400 rooms). The Marina City Council can’t wait.

Developers and their representatives in organizations like Common Ground and The Refinement Group have been lecturing local officials for years about the “magic of the market.” If government would just let development happen whenever and wherever the market says it should, the story goes, all our housing and infrastructure problems would magically be solved.

Funny how quickly this has changed now that the market has (however temporarily) decided against new development. Take Marina’s Dunes project, for example (or The Eyesore Development Formerly Known As University Villages, if you prefer). The market says this massive retail/hotel/housing development doesn’t make sense. Housing prices are too low and houses just too hard to sell for the developer to be assured a decent return on their investment. Yet, rather than redesigning the project to make it more financially viable or simply giving it up, the developer is asking the City of Marina to pay them to build the project – and the City is actually agreeing to do this. So much for the magic of the market.

What Marina is agreeing to do is to pay the developers $120 million of the tax revenue the development will generate – revenue that would normally go to things like paying the costs of police and fire protection and maintaining streets and other infrastructure.

Naturally, as major investors in the project, the people of Marina will now be entitled to share in the profits when the housing market recovers …. Just kidding! Of course they won’t. That would be contrary to the spirit of private enterprise.

Strangely, not everyone in Marina seems as ecstatic about this plan as the City Council. Meetings have been packed and discussions have been heated. Hizzoner the Mayor and members of the Council have indignantly responded to the unrest among their constituents by pointing out that deals of this kind are not unusual in redevelopment areas.

This is true. The average redevelopment area is a blighted inner city neighborhood where jobs are scarce, crime is high, and business is loathe to invest. To attract business investment and “redevelopment” that will raise the quality of life of the residents by improving the infrastructure and creating jobs, cities will offer to reimburse a portion of project costs using tax revenues generated by the projects. The loss of this new tax revenue is considered well worth it because it provides a benefit to the residents without increasing costs to the city (the city is already paying to provide services to the blighted neighborhood).

The difference here is that the project area has no current residents. It’s part of the former Ft. Ord. Rather than a blighted neighborhood being improved for the benefit of its residents, a brand new neighborhood is being created in a desirable coastal location. The cost of providing services to the people who move to the Dunes development will be new costs for the City of Marina. And we’re guessing that the people of Marina will really be missing that $120 million when the bills start coming due.

Filling that gap may take some real magic.

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